To give you a great browsing experience free of charge, this site uses cookies. Cookies help us personalize content and ads, provide social media features, track your preferences, and analyze traffic. Forbes may share this information with its advertising, analytics, and social media partners, who may use it with information you have provided to them in connection with their services.

The Inside Story Of Papa John's Toxic Culture

Two years ago John Schnatter fancied himself untouchable. He was CEO of Papa John’s, the nationwide pizza chain he founded, and served as its ubiquitous TV pitchman. The business had grown to 5,000 stores and $1.7 billion in revenue, and his fortune tallied some $950 million. “We see news story after news story of CEOs who run companies into the ground,” Schnatter scoffed in his 2016 autobiography, which chronicled the business’ rise.

ADVERTISEMENT

Then Schnatter began to do exactly that. The world already knows of his two biggest flare-ups. Last November, he criticized the NFL’s handling of national anthem protests, calling the whole affair a “debacle.” Papa John’s shares crashed 11% in hours and kept falling, Schnatter lost his CEO title and franchise sales dropped an estimated 5% or more. Then, in July, while reporting this story, Forbes learned that Schnatter had used the N-word and made other controversial remarks on a conference call two months prior. On July 11, the day that news broke, he resigned as chairman.

But the problems run far deeper. Based on interviews with 37 current and former Papa John’s employees—including numerous executives and board members—Schnatter’s alleged behavior ranges from spying on his workers to sexually inappropriate conduct, which has resulted in at least two confidential settlements.

Papa John’s founder John SchnatterJamel Toppin

To protect himself, Schnatter, 56, installed loyalists in the firm’s top ranks, who enabled its “bro” culture. That includes international president Tim O’Hern, a close friend of Schnatter’s from Jeffersonville High School, as well as current CEO Steve Ritchie, who worked directly for Schnatter for three years and has run daily operations since 2014. “John got Steve to where he is. Steve is not going to do anything to turn on John,” says a former senior executive.

ADVERTISEMENT

“Papa John’s has effectively been a public company operated like it is privately owned,” a veteran employee says. “Nothing is happening there unless John wants it to happen.”

Under Ritchie’s and Schnatter’s watch, multiple insiders describe a laundry list of transgressions: Female employees were mocked and asked if they were menstruating. Male executives made references to “gangbangs” and comments about whether women wanted “to jump on the train.” Three former employees say Ritchie was present when these types of remarks were made and just laughed along.

Reached through a representative, Schnatter disputed most of this story. Papa John’s did not respond to repeated requests for comment. Ritchie, for his part, did not respond to a request for comment. And O’Hern contested portions of this story, though he confirmed his close ties to Schnatter. After this story originally published, a Papa John’s spokesman issued this comment: “As previously announced, a special committee of the Board of Directors, comprised solely of independent directors, has retained an outside firm to oversee an audit and investigation of the culture at the company and to make recommendations for whatever changes may be necessary. We take this matter seriously. If anything is found to be wrong, we are determined to take appropriate action.”

ADVERTISEMENT

Since roughly 2013, corporate employees at Papa John’s have signed nondisclosure agreements barring them from discussing Schnatter’s personal life. Other confidentiality and nondisparagement contracts and mandatory arbitration agreements further discouraged people from speaking out. So when Schnatter wrote his memoir, Papa: The Story of Papa John’s Pizza, no one could openly dispute it.

Now the full story is being told for the first time. Forbes spent months piecing it all together. No sources cited in this article approached us; all were contacted directly. Most spoke on the condition of anonymity, citing legal shackles or fear of retaliation.

Says a recently departed executive, “The only people that are staying there are the people that can’t get a good job elsewhere.”

T

o understand Papa John’s current state, one needs to understand how it was built. John Schnatter grew up in Jeffersonville, Indiana, the son of a clerk and a serial entrepreneur. In 1984, he installed a pizza oven at his dad’s tavern, Mick’s Lounge, and started churning out pies. The pizza sold well, and he opened a stand-alone shop the following year. “I built that first Papa John’s. And then we built a pizza empire,” Schnatter writes in his book.

ADVERTISEMENT

Early employees credit Schnatter for fueling growth. “It was the American dream. We went from 23 stores to 900, and they continued to grow after I left,” says former president Dan Holland, who helped take the company public in 1993 and departed two years later.

Money changed things. Schnatter moved the firm into a luxurious new headquarters in Louisville, Kentucky, in the late 1990s. When he commissioned a fresco for one of its ceilings, he had his face painted into the plaster. His own office was outfitted with black marble and a fireplace. Schnatter sometimes conducted meetings from his exercise bike and was prone to outbursts. In one case, he moved a scorned executive’s parking spot to the very back of the garage. (Reached through a representative, Schnatter denied the incident.) “John had this tendency: When he was done with you, he was done with you,” says Donna Alcorn, who left Papa John’s in 2010 as a senior vice president and says she had a positive experience overall. “That’s why he’s gone through so many executive teams in his life.”

One former executive says the married Schnatter would disappear for days on work trips, stirring suspicion that he was “hooking up with girls.” (Schnatter denies this.) In 1999, a mobile phone representative named Lesli Workman filed a lawsuit alleging that Schnatter groped her after meeting her at a party in a Louisville park, proceeded to stalk her, then asked her boss to send her to Papa John’s to discuss a possible phone contract. Schnatter denied the allegations and filed a counterclaim alleging that she tried to extort $5 million from him and Papa John’s. The case ended with a confidential settlement.

Forbes

In 2005, after three years of falling profits, Schnatter stepped down as CEO for the first time. Nigel Travis, then the president and COO of Blockbuster, was hired to fill the role. Schnatter remained chairman but was relocated to offices 20 minutes away. In exile, he fought for control. During annual budget meetings with the board, for instance, he would draft separate budget proposals and force board members to choose between him and his CEO. (Schnatter says his budget ended up being more accurate.) In another case, at the eleventh hour he torpedoed an agreement with franchisees that Travis had spent months negotiating. When asked about the friction, Travis is diplomatic. “Most of the time John and I had a very cordial relationship,” he says.

ADVERTISEMENT

Over time, Schnatter started to visit the main campus more often to learn what was going on. He allegedly recruited Papa John’s employees to spy on their colleagues. He read workers’ emails, according to two sources with knowledge of the episodes, and sometimes conducted business from disposable phones. Schnatter denies that he accessed emails or recruited employees to spy on each other, but admits he occasionally used disposable phones for reasons of “corporate security.”

Travis left to become CEO of Dunkin’ Brands in 2008, and Schnatter returned to power. He quickly installed new executives. Among them was his former schoolmate Tim O’Hern, who had spent the previous few years working for a small real estate company owned by Schnatter. O’Hern had served as a Papa John’s vice president until the mid-2000s, when he was allegedly asked to leave the company for mistreating employees, a former senior executive says. (O’Hern disputes that allegation, saying he never mistreated anyone and was never asked to leave the company, though he acknowledges that an investigation into his conduct took place around the time he departed. He says he does not recall the nature of the inquiry.)

Forbes

Either way, after returning to Papa John’s in 2009, O’Hern became a central figure in the Schnatter orbit. And he never left. “He’s John’s hench guy that does whatever John wants,” a former executive says.

J

ust after reclaiming CEO duties, Schnatter attended the NCAA Final Four in Detroit. During the trip there was an incident with a 24-year-old female Papa John’s marketing employee that resulted in a second confidential settlement and the employee’s swift departure. Three sources tell Forbes they know of additional settlements between Schnatter and women involving inappropriate conduct, though details could not be confirmed by publication time. (Schnatter disputes this.)

ADVERTISEMENT

A female employee says that Schnatter asked about her bra size and whether she’d slept with her previous boss, and that he never let her pass in a hall without giving her a hug. (He denies this.) A male executive recalls going out to dinner with his wife and bumping into Schnatter at the bar. Schnatter allegedly told the executive that he “had a cute wife, if she’d lose some weight.” Schnatter didn’t remember the incident when confronted by the executive later, and Schnatter now says it didn’t happen.

Schnatter tapped a former executive from Anthem insurance, Jude Thompson, to help run Papa John’s as co-CEO in April 2010. Two former executives claim he got the job because he was one of Schnatter’s buddies. Schnatter denies this. Thompson also disputes that’s why he got the job, saying that he has “a pretty distinguished business career.”

Thompson brought a woman who was not his wife to company events, including the Super Bowl. “That type of behavior would be not just allowable, but encouraged,” a senior executive recalls. Thompson denies the incident. Schnatter tells Forbes that Thompson did indeed bring a mistress to the Super Bowl.

ADVERTISEMENT

Thompson departed in 2011, after just 12 months as co-CEO. Schnatter tapped a senior vice president, Tony Thompson (no relation to Jude), to be chief operating officer and then president, which multiple sources say ushered in a brief cultural respite. Schnatter stepped back from the day-to-day and the business hummed along. But when Tony Thompson left to run Krispy Kreme in 2014, things changed.

Schnatter installed longtime staffer and vice president Steve Ritchie—who started out as a Papa John’s customer service representative—to be chief operating officer and run daily operations. Ritchie had once worked with Tim O’Hern opening some Papa John’s franchises, then spent 2008 to 2011 consulting at Schnatter’s side investment, a sandwich concept named Calistoga Bakery Café. By 2015 he was Papa John’s president.

Forbes

Six former executives question Ritchie’s qualifications for the job of president, let alone CEO. His one redeeming trait, they say: fealty. When a Louisville publication named him to its Forty Under 40 list in 2013, Ritchie was asked to name his role model. “John Schnatter,” he answered.

R

itchie’s watch brought an end to the respite. “The longer he was in that position, the more rapidly the culture declined,” says a recently departed executive. At company off-sites, execs made their crudest jokes, the ones about “gangbangs” and women wanting to “jump on the train.”

ADVERTISEMENT

But it manifested even back in Louisville. Multiple sources say meetings were filled with profanity and inappropriate comments. Ritchie allegedly never intervened. “These things would happen in meetings and conference rooms and whatever. Steve would just laugh. He would just laugh,” says an individual present during such incidents.

The conduct of Dustin Couts, a longtime operations leader and close friend of O’Hern’s, is one example, three sources say. In one alleged instance, he discussed porn with a female junior employee, one source says; in another he showed inappropriate images to colleagues on his cell phone; in yet another he asked a coworker if she was on her period after she disagreed with him. And he once asked a male colleague, in front of a woman, whether his wedding ring was actually his “cock ring.” Couts didn’t respond to a text message and a phone call requesting comment. Papa John’s also didn’t respond to questions about the allegations.

Ritchie allegedly knew of these types of improprieties. At one company town hall, he referred to Operations Support and Training, the unit Couts headed at the time, as a “frat.” Meanwhile, Couts seemingly suffered no consequences. In fact he got a new title. In May 2018, he was named regional vice president of Papa John’s Asia/Pacific, according to his LinkedIn page.

ADVERTISEMENT

The culture impacted the business. “[Ritchie] promoted people based on his personal relationship with them versus their results,” says a former executive. Among the inner circle: Tim O’Hern, who was named president of international in May; VP of global technology operations Tim Newton; senior vice president of North American operations Edmond Heelan; and Couts. Some of them are also tight with Schnatter. O’Hern would travel to his lake house using Schnatter’s helicopter, with Couts sometimes tagging along.

One former executive describes Ritchie’s leadership style as “knee-jerk,” and says that he doesn’t consult data. Another says he repeatedly failed to address logistical issues at Papa John’s, for fear of angering Schnatter, who considers himself a master of operations. “You would look at our metrics and find that we had a huge percentage of people getting an inaccurate order,” the executive recalls. But nothing was done. Infrastructure at Papa John’s also lagged behind. “From a technology perspective, it wasn’t the easiest company to work for,” says Mark Nance, who left as vice president of digital solutions in 2016.

T

he rumor at Papa John’s is that Schnatter made his NFL “debacle” comments in November 2017 to support his close friend Jerry Jones, the owner of the Dallas Cowboys, who was reportedly feuding with the league’s commissioner, Roger Goodell. (Schnatter denies that was his reason.) In a subsequent all-staff meeting, Schnatter told employees that he wanted to tell Goodell “to get off his ass and show some leadership,” according to an individual who was there. (Schnatter admits he used “words to that effect.”) Partly as a result of his NFL comments, corporate revenue fell 5% in the first quarter versus the prior year. Net income, meanwhile, was down 40%. One Papa John’s franchisee says that, in an attempt to win back lost customers, in recent months the company has implemented more discounting than at any point in its history, and that more operators are positioning to sell than ever. “Things went to hell” after Schnatter’s remarks, recalls an executive who left earlier this year.

Forbes

Schnatter handed the CEO role to Ritchie on January 1, leading many to believe that he had backed away from the business. In truth, little changed, since Ritchie already ran the day-to-day. If anything, Schnatter actually became “more involved than ever” in an attempt to manage the crisis, says a source close to the company’s top ranks.

ADVERTISEMENT

This spring, Schnatter feuded with Brandon Rhoten, who was then Papa John’s chief marketing officer, over efforts to reduce Schnatter’s presence in TV advertisements. (Schnatter denies this, and claims Rhoten proposed putting him back in ads; Rhoten did not respond to multiple requests for comment.) Schnatter allegedly bristled at the suggestion. According to a source close to the company, he personally hired a marketing agency to develop ads featuring him that would air in key markets. Rhoten was fired in May. “As soon as he tried to remove John from those commercials, his goose was cooked,” says an individual close to the situation.

Also in May, Schnatter participated in a conference call with marketing firm Laundry Service, in a role-playing exercise intended to avoid another public-relations kerfuffle. During that call, when asked how he would distance himself from racists, Schnatter made remarks he thought were simply practice, but that multiple individuals on the call found offensive, according to a source familiar with the situation. He downplayed his NFL snafu, saying that “Colonel Sanders called blacks n—–s” yet never faced public backlash. He also made reference to his upbringing in Indiana, where, he said, people used to drag African-Americans from trucks, in an apparent attempt to illustrate his aversion to racism. Laundry Service quickly moved to cancel its contract with Papa John’s, says a source with direct knowledge of the situation. (Schnatter says that Papa John’s revoked the contract and that “in both of these contexts, [he] was making a strong statement against racism.”)

After Forbes reported on the incident earlier this month, Schnatter confirmed his use of the N-word and apologized, “regardless of the context.” He stepped down as chairman that night. But two days later, on a TV interview, he walked back the apology and blamed Laundry Service for inducing his use of the slur. “They were promoting that kind of vocabulary,” he said, later adding that, “You know, Forbes is gonna lie.”

ADVERTISEMENT

T

he next chapter of the Papa John’s saga is unfolding in real time. As of last week, the company’s partnership with Major League Baseball was indefinitely suspended. Its name will come off the University of Louisville football stadium. Rumors of a buyout are percolating. And Schnatter has vanished from all advertisements. Nearly everyone expects Papa John’s to move on without him.

Papa John’s founder John SchnatterJamel Toppin

Except those closest to Schnatter. He is still on the board, owns nearly 30% of shares and has Ritchie, O’Hern and the rest in command. Even if he does back away, the relics of his culture remain.

Schnatter seems intent on retaining influence. He pays for his office space at Papa John’s headquarters, which began as a way to keep a private staff on site. The company is attempting to terminate the agreement, but Schnatter’s representatives say it has no grounds. And on July 12, the day after he resigned as chairman, Schnatter showed up to work as usual.